Yesterday, Thursday 14 May 2020, the Government announced an extension to the COVID-19 Wage Subsidy, as part of its $50b COVID-19 recovery budget.  In this article, we outline the eligibility requirements employers must meet to apply for the Wage Subsidy extension, and what entitlements they could receive.

Wage Subsidy extension

The Wage Subsidy extension will be available from 10 June 2020 until 1 September 2020, and is aimed at supporting employers, including sole traders, who continue to be significantly impacted by COVID-19.

The Ministry of Social Development (MSD) has advised that more information will be made available before 10 June.  The information provided is only a brief indication of the eligibility requirements and entitlements which employers could receive on application.

Eligibility and entitlements

Employers who wish to apply for the extension must, unlike the present Wage Subsidy scheme, have had, or expect to have, a revenue loss of at least 50% for the 30 days before they apply, compared to the closest period last year.

Further, unlike the current scheme, the extension will cover 8 weeks per employee from the date the employer submits their application to MSD. If granted, the extension will be paid as a lump sum at the same weekly flat-rate as the Wage Subsidy:

  • For full-time employees (working 20 hours or more per week), the rate is $585.80 (gross).
  • For part-time employees (working less than 20 hours per week), the rate is $350.00 (gross).

Employers will also be required to agree to certain obligations, which include:

  • To pass the subsidy onto the employees in respect of whom the application has been applied for;
  • To retain said employees for the duration of the subsidy;
  • To do their best to pay your employees at least 80% of their normal pay; and
  • Take active steps to mitigate the impact of COVID-19 on your business.

Already receiving a COVID-19 payment

MSD has advised that an employer who is already receiving a COVID-19 payment in respect of a certain employee, will not be able to simultaneously claim another COVID-19 payment for that same employee. “COVID-19 payment” includes the:

  • Wage Subsidy;
  • Leave Support Scheme; and
  • Wage Subsidy Extension.

For example, if an employer is receiving the Wage Subsidy for an employee, they will not be able to apply for the Wage Subsidy Extension for that employee until the 12 week period they are receiving the Wage Subsidy for, has finished.

Please see our previous articles on the Wage Subsidy and Leave Support Scheme for more information about these schemes.

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